Nine member states break budget rules

The European Commission will announce next week that a further nine EU member states are in breach of EU rules on budgetary discipline.

The nine are expected to be Germany, Austria, Portugal, Slovenia, Slovakia, Czech Republic, Belgium, Estonia and the Netherlands.

They will join another 11 countries that have already been placed under the EU’s 'excessive deficit procedure' (EdP) – a process in which countries are identified as having deficits that are beyond the limits set by the EU’s Stability and Growth Pact and are given deadlines for bringing their deficits down.

“We are not sanctioning the countries that receive the recommendations for correction [of budget deficits],” said Joaquín Almunia, the European commissioner for monetary affairs. “We are trying to help them.”

The EU’s Stability and Growth Pact obliges member states to keep their budget deficits within 3% of their gross domestic product (GDP).

The Commission will adopt reports identifying the countries that are in breach of the pact. It will then present recommendations by mid-November on deadlines for correcting the deficits. The recommendations will be sent to finance ministers for approval, a process which the Commission expects to be completed by the end of the year.

“The credibility of the pact will go towards zero if it is not implemented,” Almunia said.

Member states’ budget deficits have ballooned since the escalation of the financial crisis last year, because of a combination of falling tax revenues and fiscal stimulus measures.

The Commission estimates that the average budget deficit across the EU will reach 6% of GDP in 2009, compared to 2.3% in 2008. Its projection for 2010 is 7.3%.